The end of the VAT exemption on small parcels from China

For years, low-value shipments from China entered the EU without paying VAT. That changed, and it's worth being clear about it whether you import to resell or buy for yourself.

We explain what changed, why, and how it affects a small parcel from China today.

What changed and since when

Until 1 July 2021, shipments from outside the EU with a value of €22 or less were exempt from VAT. From that date, the European Union removed that exemption: now all shipments pay import VAT, whatever their value.

Why it was removed

The exemption created unfair competition against European commerce —which does charge VAT— and was open to abuse, such as undervaluing shipments to slip under the threshold. Its removal seeks to level the playing field.

What happens now with a small parcel

• Every shipment pays import VAT, regardless of its value.
• Duty only applies from €150 of goods value; below that it's exempt from duty, but not from VAT.
• The courier may also charge handling fees for clearance.

The IOSS system for e-commerce

For shipments up to €150, online shops can use the IOSS (Import One-Stop Shop): they charge VAT at the time of purchase and the parcel enters without you having to pay VAT at destination. If the shop doesn't use IOSS, VAT and handling fees are charged on delivery.

What it means for your business

If you import to resell, VAT is deductible, so the change mainly affects your cash flow and planning. If you buy as an individual, you'll now always pay VAT, plus the carrier's possible handling fees.

How R'S WARE helps you

For commercial imports we calculate VAT and duty in advance and, with the DDP model, deliver the goods with everything settled, with no surprises or unexpected handling fees.